RECESSION FINALLY HITS DOWN ON THE FARM
August 31, 2009
The American farm, which has weathered the global recession better than most U.S. industries, is starting to succumb to the downturn. According to the Agriculture Department, U.S. farm profits will fall 38 percent this year, indicating that the slump is taking hold in rural America, says the Wall Street Journal.
The Agriculture Department says that it expects net farm income to drop to $54 billion in 2009, down $33.2 billion from last year's estimated net farm income of $87.2 billion, which was nearly a record high. The profit drop signals that the decades-long contraction in the number of farmers who produce commodities such as hogs and milk is likely to accelerate this year, says the Journal:
- U.S. corn farmers are projected to harvest about 12.8 billion bushels this fall, which would be the second-highest crop ever, and soybean farmers are expected to harvest a record 3.2 billion bushes.
- The price of corn and wheat is 41 percent lower than last year, while prices of hogs and nonfat dry milk are down one-third from 12 months ago.
- Before the recession, hog farmers enjoyed several years of good business in part because exports were booming to countries such as China.
- When the recession took hold, restaurants cut orders for pork and foreign demand cooled. Pork exports in June were 36 percent lower than June 2008.
Farmers, many of whom already receive federal subsidies, are seeking more help. Last month, the Obama administration said it will put an additional $243 million into the pockets of dairy farmers by temporarily raising the price the government pays for dairy products under its long-running dairy-price support program.
However, the decline in commodity prices also has begun to depress the value of U.S. farmland for the first time in two decades, says the Journal.
Source: Scott Kilman and Lauren Etter, "Recession Finally Hits Down on the Farm," Wall Street Journal, August 28, 2009.
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